CEO Kurt Sheppard said the decision was based on “revenue” and “rightsizing operations in New Mexico.”

“Current consumer census did not justify maintaining current staffing patterns,” Sheppard told the Albuquerque Journal in an email.

He said Valle del Sol has 120 staff in New Mexico, and as services “are stabilized and continue to grow” additional staff may be recruited.

The Human Services Department halted Medicaid payments to 15 nonprofits in June after an audit that the department said showed overbilling, mismanagement and possible fraud. Arizona firms brought in by HSD took over 12 of those operations.

Advocates for the mentally ill and addicted say the ensuing upheaval in the system has interrupted services to clients.

Edward Church, a therapist in Los Lunas with Valle del Sol, was laid off effective Oct. 24. The letter he received from Valle del Sol said the company had hoped to keep all its employees, but “unfortunately, this is not possible due to revenue shortfalls.”

Church said eight employees were laid off at the Los Lunas site, including three therapists. He also contended that the client caseload in Los Lunas has dwindled to less than 400, and that it used to be upwards of 1,000 under Valencia Counseling Services.

Church said the layoffs leave the Los Lunas office with the equivalent of two full-time therapists to juggle some 380 clients.

“As we are in a competitive environment, we do not want to disclose the details of the layoffs,” Sheppard said in his email.

Nor would he comment on Church’s assertion about the reduction in the number of people being served.

“What is important is we have worked to provide services to every person who presents for services,” Sheppard wrote. “We have not turned away anyone who is enrolled with a health plan for which we have a contract.”

He said the focus of the services now being provided is “based on a truly assessment-driven model, versus a past history of cookie-cutter treatment plans.”

Human Services Department spokesman Matt Kennicott said the new Arizona agencies “are now billing at the appropriate level, no longer siphoning additional funds out of the Medicaid system, and consumers continue to get the care they need.”